On November 23, 1928, W.D. Gann released his 1929 Annual Forecast for the Dow Jones Industrial Average (DJIA) to subscribers. Published on the eve of what would become one of Wall Street’s most catastrophic years, the forecast used Gann’s time-and-price methods to anticipate market swings.
W.D. GANN SCIENTIFIC SERVICE INC.
1929 Annual Stock Market Forecast, November 23, 1928.
1929 Annual Stock Market Forecast, November 23, 1928.
To evaluate the forecast's quality, projected dates of swing highs and lows from Gann’s 1929 chart were compared with actual DJIA daily closes during 1929. A trading test was conducted: short at each forecasted high and cover at the next low, then reverse to long on the same date and price, exiting at the following high, and so on.
Across 49 completed long and short trades, gains and losses were measured in points—exit minus entry, adjusted for shorts—and expressed as percentages relative to the starting level of 307.0 points, based on the first short trade entered on January 2, 1929.
Number of trades: 49 (24 long, 25 short). Win rate: 51.02% (25 winners, 24 losers). Max consecutive wins: 3; Max consecutive losses: 4. Trade duration (days): average 7.46; median 6.75; range 2–22. Average return per trade: 1.17% (best +19.54%, worst −6.58%). Drawdowns: absolute 0.00%; relative 6.58%; maximum 9.92%. Net annual return: +59.18%.
Very extraordinary and remarkable in many ways. Flip your own coin.
Blindly trading all the projected swings in Gann’s chart through December 31, 1929, would have produced a cumulative net annual profit of 171.7 points (59.18%) with no absolute drawdown.
» What Gann wrote in his courses and what he traded were two very different things. «
He relied on a remarkably blunt and straightforward bread & butter strategy:
Trading double tops and lows in the direction of the daily trend.
» Maybe the lesson for all of us is to keep things as simple as possible. «